Taxes & Incentives

For assistance with determining what tax incentives and abatements are available for your company, please contact the Cherokee County Industrial Development Authority office at 256-927-1805. More in-depth information about state taxes and incentives can be found in the Tax Incentives for Industry Booklet provided by the Alabama Department of Revenue.

Enterprise Zone Tax Incentives

To help spur economic growth in Cherokee County, there are certain incentives available to new and expanding businesses located in the county through the Enterprise Zone Credit Program. Companies must meet certain site and employee requirements to be eligible for Enterprise Zone incentives. More in-depth information about Enterprise Zone incentives can be found in the Enterprise Zone brochure.

Incentives include:

Tax credit up to $2,500 per new permanent employee to be applied against the income tax liability and/or business privilege tax liability
Exemptions for income, sales and use, and business privilege tax liability

Corporate Income Taxes

Rate is 6.5%

Based on net taxable income of business done in Alabama

Businesses can deduct all of their federal income taxes apportioned to Alabama

Incentives include:

Net operating loss carryforward

Deduction for pollution control equipment

Income tax capital credit

Enterprise Zone credit

skills educational tax credit

Income Tax Capital Credit

Available to new and expanding industries

Up to 5% credit for the total capital costs of qualifying projects

Available every year for 20 years

Lower threshold available for business in Cherokee County because of its Enterprise Zone designation

Business Privilege Tax

Rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama

Incentives include:

Deduction for pollution control equipment

Deduction for air carrier with hub operation

Enterprise Zone credit

State Unemployment Tax

Employees do not contribute

Employer requirement is based on first $8,000 of each employee’s compensation

Rates vary from 0.5% to 5.4%

New employer rate is 2.7%

Rates are based on employer’s experience rating

Sales and Use Tax (General)

CHEROKEE COUNTY

ALABAMA

Source: Alabama Department of Revenue

Sales Tax

2.5%

4.0%

Use Tax

2.5%

4.0%

Sales Tax on Machinery

1.0%

1.5%

Use Tax on Machinery

1.0%

1.5%

Incentives Include:

Abatements of state and non-educational local construction-related sales and use taxes

Discount if sales tax is timely paid

Exemption for raw materials

Exemption for pollution control equipment

Exemption for quality control testing and donations to charitable entities

Utility gross receipts tax exclusions

Enterprise Zone credit

Property Tax

Source: Alabama Department of Revenue

Total State

6.5

Total Cherokee County

42.0

Total School

22.0

Centre

5.0

Cedar Bluff

5.0

Leesburg

5.0

Gaylesville

5.0

Sand Rock

5.0

Incentives Include:

Abatements for non-educational property taxes

Exemptions for pollution control equipment

No property taxes on inventory (some restrictions apply)

Exemptions for raw materials inventory

Jobs Tax Credit

Cash refund of up to 3% of the previous year's gross payroll (not including fringe benefits) for qualifying new, direct jobs. Incentive period is up to 10 years.

Up to an additional 0.5% cash refund is available on the wages of veterans, for companies, which employ a workforce composed of at least 12% of veterans.

Up to an additional 1% cash refund for projects in counties with a population less than 25,000. Two sites per year located outside of these counties can receive this refund at the Governor's discretion.

Investment Tax Credit

Credit of up to 1.5% of the qualified capital investment costs for a qualifying project each year for up to 10 years (Up to 15 years for projects in counties with populations less than 25,000 selling their output nearby)

Credits can be used to reduce income tax (or taxes on banks or insurance companies), and taxes for utility services.

Credits can be carried forward for five years.

The first three years of the credits may be sold to create cash for projects, with Department of Commerce approval.